www.counter-fraud.com

Credit for OLAF And OLAF has welcomed an Italian court ruling relying on OLAF evidence and expert testimony to sentence a fraudster to one year's jail. "This new ruling — at an appeal level - confirms the added-value that OLAF can bring in cases concerning transnational fraud affecting the financial interests o f the EU," noted the E U agency. This case involved an executive at an Italian trading company supplying water supply equipment abroad under €1.95 millions' worth o f European Development Fund contracts. OLAF revealed that

the company had actually supplied goods from China worth more than €400,000, while declaring they were made in Italy.

Notes 1. http://ec.europa.eu/anti_fraud/documents/reports-

commission/2013/l_act_partl_en.pdf 2. http://ec.europa.eu/anti_fraud/about-us/funding/hercule-

iii/index_en.htm

• Keith Nuthall

FEATURE 1 BRIBERY AND CORRUPTION

The measure of success: SFO's victory in first contested overseas corruption case On 18 June 2014, two individuals involved in t h e Innospec corruption o f Indonesian officials were convicted for conspiracy t o commit corruption. The first ever contested prosecution for overseas corruption brought by t h e Serious Fraud Office (SFO) concerning bribery o f public officials under t h e pre-Bribery Act 2010 corruption regime, Omar Qureshi and Amy Smart of CMS Cameron McKenna look t o t h e potential impact on future proceedings.

Background The prosecutions were brought against Innospec Limited's ("Innospec") former executives following the corporate pleading guilty to bribing foreign officials and agreeing to pay fines to, amongst others, the SFO in December 2009. This was part of a sentencing deal negotiated with the UK and US authorities (who had uncovered the wrongdoing as part o f an investigation into Innospec's US parent, Innospec Inc, relating to the U N Oil for Food Programme). Innospec admitted that it had paid US$8m in bribes to employees of Pertamina (an Indonesian state-owned refinery) and other government officials in Indonesia to secure contracts worth US$170m for the supply ofTetraethyl lead.

A "global settlement" was reached in December 2009 and a plea agreement was entered into between Innospec Inc, the US Department o f Justice (DoJ), the Securities & Exchange Commission (SEC), the Office of Foreign Assets Control (OFAC) and the SFO. This was a global settlement of US$28.8m, comprising fines o f US$14.lm for the US authorities and US$12.7m for the SFO, subject to the US and U K courts' approval. The UK fine was begrudgingly approved by the English court on 26 March 2010. However, the court noted that the SFO

did not have the power to enter into such agreements and no such deal should be entered into again. This judgment was one o f the drivers for the introduction earlier this year o f deferred prosecution agreements (DPAs) as a tool for resolving corporate economic crime cases.

Following the corporate settlement, four Innospec executives were charged with conspiracy to corrupt: Dr Miltiades Papachristos (former regional sales director for the Asia Pacific region), Dennis Kerrison (former CEO), Paul Jennings (former CEO) and D r David Turner (global sales and marketing director). The offences took place between 2002 and 2008 and were, therefore, pre-Bribery Act 2010 offences. Both Mr Jennings and Dr Turner pleaded guilty (to various counts of conspiracy to corrupt), while D r Papachristos and Mr Kerrison entered not guilty pleas and went to trial, following which they have now been convicted. All four executives are expected to be sentenced on 25 July 2014.

Comment The jury's unanimous verdict represents a positive outcome for the SFO, following what has been a lengthy

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Fraud Intelligence

(and no doubt cosdy) investigation and trial process. These convictions are particularly notable as they are for offences under the pit-Bribery Act 2010 regime, which are considered notoriously difficult to prosecute — that difficulty being one of the key reasons for the introduction o f the more straightforward offences under the Bribery Act 2010. This success may, therefore, give the SFO confidence to pursue more individual prosecutions for overseas corruption, particularly for offences under the Bribery Act.

It also demonstrates the extent o f national and international cooperation between authorities, with the SFO crediting the DoJ, SEC, City of London Police, Cheshire Constabulary and authorities in Indonesia, Switzerland and Singapore for their assistance in securing this outcome.

Finally, it will be interesting to see how the court approaches sentencing of the four individuals, given two had pleaded guilty at an early stage, while the others contested the charges; the sentences may provide an early indicator of the court's approach under recently published sentencing guidelines for corruption offences, although those guidelines do not technically come into force until October 2014.

It may be that Innospec's well-publicised plea agreement played a role in the jury's decision-making. This may further encourage the SFO, given the recent introduction o f DPAs, which require publication of an agreed statement o f facts regarding the wrongdoing and an undertaking that the corporate will cooperate with the SFO in the investigation and prosecution of individual wrongdoers, including employees. This brings into focus concerns that DPAs, which may be agreed by corporates for commercial and pragmatic reasons even where there may be weaknesses in the prosecution's case, could harm the defences o f those individuals later prosecuted for the underlying wrongdoing, as juries may note that the corporate had been willing to settle its potential liability through a DPA and view that as an implicit (if not explicit) acknowledgement that a crime had occurred.

• Omar Qureshi (+44 (0) 20 7367 2573, omar.qureshi@ cms-cmck.com) is a partner a t CMS Cameron McKenna LLP; Amy Smart (+44 (0) 20 7367 3335, amy.smart@cms-cmck. com) is a lawyer a t the firm.

FEATURE 1 TECHNOLOGY

Bits and pieces - on the IT forensics trail As c o m b a t be tween t h e dishonest and t hose w h o would thwar t t h e m moves, increasingly, online, so t h e electronic arms race gathers pace with da t e privacy always ready t o explode in t h e midst o f an investigation. Phil Beckett of Proven Legal Technologies sets o u t a plan of campaign.

The battle between fraudsters trying to conceal their ac­tions and forensic experts trying to uncover them has been fought for many generations. However, recent develop­ments, for example Edward Snowden's revelations about the Prism programme in the US, are raising awareness of the techniques and tools that investigators use.

Increased visibility runs parallel with an escalation in privacy awareness amongst software developers. This means that many o f the artefacts, which used to remain on a hard drive and were the source o f much investigation, are now no longer present or are securely deleted. Further, the prevalence o f wiping' or 'secure deletion' tools mean that many systems are cleansed before they can be investigated. So, does this leave the investigator playing 'David' against the 'Goliath' fraudster? To some extent it does but, through a combination o f proactive measures and reactive investigation techniques, the slingshot can still find its target.

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Steps in investigation The first step in carrying out an investigation is to ensure that the likely actions o f the fraudster are fully understood. It is a common notion in firms that

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